[Congressional Record Volume 147, Number 49 (Thursday, April 5, 2001)]
[Extensions of Remarks]
[Page E554]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    REFORM DAIRY PRICING REGULATIONS

                                 ______
                                 

                          HON. THOMAS E. PETRI

                              of wisconsin

                    in the house of representatives

                        Wednesday, April 4, 2001

  Mr. PETRI. Mr. Speaker, today I am introducing a bill that will 
reform the method by which fluid milk has been priced in our country 
for too long. The Federal Milk Marketing Order system is a relic that 
flxes prices and feebly serves the outdated aims of a bygone era. 
Created in the 1930's, its original purpose was ostensibly to provide a 
locally produced supply of fresh milk throughout the country. Over 
sixty years ago, such a system may have made more economic sense. We 
didn't have the Interstate highway system, efficient refrigerated 
trucks, or reconstituted milk, for example. Today, conditions are 
vastly different, necessitating reform of the federal dairy program.
  By basing the price of Class I, fluid milk, on the distance from Eau 
Claire, Wisconsin, the federal government has radically distorted dairy 
markets and discriminated against the dairy farmers of the Upper 
Midwest. The resulting inefficient production of milk in areas distant 
from the Upper Midwest has led to the oversupply of milk and depresses 
the price of processed dairy products. Dairy farmers in Wisconsin have 
paid dearly under this system. Today, my state loses approximately five 
dairy farmers a day.
  Furthermore, by using distance to set the price of fluid milk, the 
federal order system is inherently anti-consumer. Consumers are stuck 
paying the set price for milk instead of the price determined by a free 
marketplace where efficiency is rewarded. The Congressional Budget 
Office estimates that eliminating this market distorting system would 
save $669 million over five years. In an age of ``global free trade,'' 
this system that effectively puts a tariff on milk from other regions 
of the country is absurd.
  The bill I introduce today reforms the single most discriminatory 
element of the Federal Milk Marketing Order program by prohibiting the 
Secretary of Agriculture from basing the price of fluid milk on 
distance or transportation costs from any location outside the 
marketing order area unless 50 percent or more of that area's milk 
comes from a location outside that order area. By eliminating this 
factor the Secretary of Agriculture will have to consider supply and 
demand factors when setting milk prices as required by the Agricultural 
Marketing Agreement Act. Additionally, the bill requires the Secretary 
of Agriculture to report to Congress on the specific criteria used to 
set milk prices. This report will include a certification that the 
criteria used by the Department in no way attempts to circumvent the 
prohibition on the use of distance or transportation costs as the basis 
for milk prices.
  Reform of the Federal Milk Marketing Order program is long overdue. 
The discrimination against the dairy farmers of the Upper Midwest must 
end. Not only will this bill restore fairness to our dairy policy, but 
consumers of fluid milk across the nation will also benefit from this 
reform. I urge my colleagues to do the right thing and support this 
bill.

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